UPS entered the China market in 1996 through a partnership with Sinotrans, China's largest freight forwarder. By 1999, UPS had expanded to 130 cities in China compared to FedEx's 144 cities. FedEx entered China earlier in 1973 through acquisitions and focused on building relationships with Chinese entrepreneurs. By 1999, both companies had established express distribution centers and online shipment services in major Chinese cities like Beijing and Hong Kong. While UPS invested less than FedEx initially, it aimed to partner with local companies and project itself as a Chinese rather than American brand.

1. FEDEX vs. UPS -
CHINA

2. Entry of UPS
• 1996:
 Commenced operations through agent with China’s biggest freight
forwarder – Sinotrans and JV with the company
 Formed alliances with airlines – Hong Kong Dragon Airlines ltd &
China Eastern Airlines Corp
• 1998:
 2mn$ air hub facility at express handling centre at Hong Kong airport
• 1999:
 Post Agreement with Sinotrans ops extended by 22 in 130 cities V/S
FedEx’s 144
 1999:Entered into Strategic Alliance with 7-eleven, a leading
convenience store operating in Hong Kong round the clock

3. Entry of Fedex
1973
• Entry into China through acquisition (Gelco Express Intl.).
• Focussed on Chinese entrepreneurs
• Acquired airlines (Flying Tiger Inc & Evergreen International Airlines)
1996
• Receipt of permit from CAAC (Beijing & Shanghai
1998
• Launched Express Dist Centres in Beijing and Hong Kong
1999
• FedEx Internet Ship – prepare shipment documentation for
consignment to more than 60 countries &online shipment status

4. Invested just a fraction of what FedEx Like FedEx, UPS can build around its
had put into Asia. multinational customer base with
Chinese operations.
creating an image “not American, but
more worldwide.” UPS can pass on cheap cargo to target
the more lucrative document and small
Sought to build relationships discreetly, package market, since they do not need
on Chinese terms. to fill an aircraft.
S O
Lacked its own air service in China,
W T Like FedEx, shipping companies already
making them less logistically versatile well established in China pose a threat.
than FedEx.
While UPS contends it will add its own
UPS does not have many of its own airplanes in China when it becomes
trucks and drivers in China to build necessary, by that time FedEx may
further brand recognition. already be far ahead in this area

5. Aggressive advertising campaign Multinational corporations with Chinese
operations that already use FedEx
Highly controlled distribution system elsewhere.
with constant information about the
status of shipments. Customers who particularly value or
require constant information regarding
FedEx has its own air service in and out shipment status.
of China.
S O
W T
Lack of personal relationship building
within China Shipping companies already well
established in China.
In order to fill their aircraft, FedEx is
forced to take on many cheaper Very large investment in China based
packages with very low profit margins. infrastructure including acquisition of
Flying Tiger Line Inc. to establish its own
air routes in Asia.

6. Advertising & Promotion
Heavily Advertise Less emphasis on
Advertisement
Publicizing its services offering Preferred to project itself as
in China local Chinese company
Hired popular media company Sponsor Chinese New Year
to create brand awareness celebration and Olympic games

7. Action Plan of UPS
• Year 1 – Continue focus on building relationships with large
China-based businesses, as FedEx is more focused on its
existing multinational base. Add more “brown” UPS trucks in
Chinese cities to boost brand awareness.
• Year 2 - Add more trucks in smaller Chinese cities as
necessary. Evaluate air service needs.
• Year 3 – By this time UPS should consider adding its own air
service to China in order to keep up with FedEx.

8. Action Plan of FEDEX
• Year 1 – Continue to call on multinational customers in China.
• Year 2 – Expand advertising focus to large China-based
businesses in order grab some of this business from UPS and
other local companies. Send representative to China to talk to
these companies.
• Year 3 – Evaluate possible need for more air service to the
Chinese region.
• Year 4- Sponsor the 2004 Olympic games.

9. UPS post 2003
• UPS took an ownership position in Sinotrans and
also became the first foreign carrier to form a
partnership with a domestic Chinese air carrier,
Yangtze River Express, cutting a day off delivery
times.” UPS Press Release June 18, 2004
• In 2004, the United States signed a new aviation
agreement which allowed a five fold increase in air
cargo capacity between the two countries over the
next six years.

10. FedEx post 2003
• On September 2, 2003, FedEx launched its first direct flight
from Shenzhen to its hub in Anchorage, Alaska to keep up
with increasing demand in South China region.
• "For China to sustain the kind of growth we have seen in the
last five years, it is essential that it establishes stronger links
to the economies of Europe and the United States." FedEx
Express Asia Pacific Division President David L. Cunningham
Jr., 2003
• FedEx plans to move hub to China after 2007.

11. Thank You